1.You are about to purchase a new car and have two options to pay for it. You can pay $20,000 in cash immediately, or you can get a loan that requires you to pay $500 each month for the next four years. The interest rate you earn on your cash is 6%. Which option should you take?

2.You are the lucky winner of the $30 million state lottery. You can take your prize money either as (a) 30 payments of $1 million per year (starting today), or (b) $15 million paid today. If the interest rate is 8%, which option should you take?